Category: Crypto

It might have been easy in recent years for incumbents, mass market investors and generally the mainstream to dismiss cryptocurrency for several reasons. It’s volatile. It exists virtually. It’s all about anonymity. It’s not regulated. It cuts out the middleman. It was created by a community of developers. For years, the virtual currency seemed more an underground fad than a true and legit financial resource. But that finally appears to be changing.

Crypto Gets Institutionalized

With the recent announcement from Goldman Sachs that they’ve teamed with billionaire Michael Novogratz to invest in BitGo, a startup that aims to help institutional investors securely store their cryptocurrency, crypto may no longer be the red-headed step child of finance. Between them, Goldman and Galaxy Digital Ventures are investing about $16 million in BitGo. And while this amount is a drop in the bucket for Goldman and Novogratz, it certainly indicates the incumbents taking crypto seriously and realizing their customers are looking for the option to not only invest but have a safe place to keep these investments.

Beyond security, Fidelity is taking it a step further, rolling out their own standalone company, Fidelity Digital Asset Services (FDAS). The world’s 5th-largest asset manager has established FDAS for their clients, hedge funds, and FIs to trade and store cryptocurrency. With $7.2 trillion in assets under management, 27 million customers and 13,000+ institutional clients, Fidelity might seem an unlikely candidate to hop on the crypto bandwagon, but they do spend $2.5 billion per year on technology, partially through incubators that house its artificial intelligence and blockchain projects.

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This is part 3 of our multi-part series on the blockchain. In parts 1 and 2 we talked about the specific effects of blockchain and cryptocurrency on the finance industry as well as how it will impact asset management and investing. Today we are diving into payments and banking.

You Get a Currency and You Get a Currency

While many banks are skeptical of bitcoin, none are skeptical of blockchain. But the marriage of the two is where it gets dicey. Because while central banks are looking into issuing digital currency, the biggest banks think the technology isn’t evolved enough to handle the world’s biggest payment systems.

Ripple sees an opportunity to make payments faster and cheaper by connecting different ledgers and thereby creating a universal protocol and solving the multi-trillion liquidity problem. And they’re not alone.

Feeling the Need for Speed

Payment providers getting into the blockchain space have the distinct benefit of doing the fund transfers so they can funnel users’ funds into purchases of the underlying currencies or to accounts at exchanges. This allows for significantly lower settlement time and lower costs for both providers, thereby lowering costs for the end user.

And IBM has started numerous pilots in this area. From their collaboration with startup Stellar, which uses blockchain technology to connect flat currencies to enable instant international transfers, to New Zealand-based payments company, KlickEx, they are hard on the heels of several blockchain endeavors.

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This is part 2 of our multi-part series on blockchain. Catch up on part 1 here.

A lot of industries and areas are being disrupted by blockchain technology. We took a deeper dive to see how the new technology specifically affects Asset Management & Investing.

Mo’ Money, Mo’ Margins

Blockchain’s effect on asset management and investing firms will be significant in terms of cost reduction and improved margins. According to Accenture, the new technology could save the banks up to $12B every year. This “provides a rare concrete estimate of blockchain’s potential savings.” Because blockchain data is essentially tamper-proof, it simplifies the supply chain process, removing the need for reconciliation and potentially making it easier for auditing. Additionally, by removing the ‘middle-man’, compliance costs could be reduced by up to 50%. Blockchain-based solutions can streamline processes and cut costs by greatly improving upon the traditionally fragmented data quality most bank database systems currently use.

The bottom line for all of this is the huge potential of significant cost savings, faster transactions, and more accurate data and reporting.

As we stated in Part 1 of this series, there are many unknowns and it’s early days for this evolving technology. As we dig into the asset management use case, we see that the potential cost savings are significant. But, how we get there and what new solutions might drive us there are still unclear. Stay tuned as we share use case scenarios for payments and banking in our next post in this series.

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This is part 1 of our multi-part series on Digital Assets and Blockchain, and what these could mean for the finance industry.

It seems like you can’t take one step these days without bumping into someone talking about cryptocurrencies. But for all this talk, the average investor probably doesn’t understand the underlying tech behind it — which is the real value add — the blockchain.

So let’s ask ourselves, How will blockchain affect the finance industry?There are a lot of unknowns, both potentially negative and positive. Let’s start with the potential positives:

Fees

It’s estimated that consumers could save up to $16 billion in banking and insurance fees each year through blockchain-based applications. By reducing transaction costs and essentially cutting out the middleman, blockchain offers an efficiency that cuts through costly financial ‘red tape’. And with shorter clearance or settlement times, reduced back office and compliance costs, companies could also see similar savings as well as risk reduction.

The one thing we can be certain of about blockchain is that we don’t know what impact this technology will have and how many industries it will affect. Even with all the excitement surrounding it and its entrance into the mainstream, it’s still in the early days. Smart investors and tech titans will tread lightly and keep a watchful eye on this continually and quickly evolving space.

Stay tuned for the next post in this series on what blockchain and cryptocurrencies mean specifically for asset management and investing vs. payments and banking.

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We’re pleased to announce that we’ve connected our core product — Portfolio View — to Coinbase, a digital currency exchange with more than 10 million users and more than $50 billion in trading activity in digital currencies such as Bitcoin, Ethereum, and Litecoin.

“With our TradeIt partnership, Coinbase users will now have the ability to view their digital currency holdings on web portals such as Yahoo! Finance. As digital currency trading volumes build and trading becomes more mainstream, partners like TradeIt and Yahoo help provide easy access to retail investors, anywhere and anytime.” said Sam Rosenblum, Director of Global Business Development at Coinbase.

TradeIt enables our partners – developers, publishers, social networks – to easily add digital currencies via integration with our SDK. With this expanded support of digital currencies, Yahoo! Finance has gone live with our Portfolio View SDK. Yahoo! Finance users will now be able to link to their Coinbase account and monitor their positions in Bitcoin, Ethereum, and Litecoin.

TradeIt’s platform is designed to support your platform and your end users in their financial journey. TradeIt supports equities, ETFs, options, FX and digital currencies. Enabling our partners to quickly and easily integrate additional asset classes that end users are looking for drives our product roadmap.

“We are excited to be expanding our coverage of securities and adding digital currency support to our core products,” said Nathan Richardson, co-founder and CEO of TradeIt. “Supporting our partners with easy to integrate solutions for their apps is key to our efforts in enabling developers and publishers to meet the needs of their end users.”